Tuesday, February 25, 2014
In the News: Minimum Wage Increase
The minimum wage battle brews again. Earlier this month, President Obama signed an executive order to raise the minimum wage for federal contract workers to $10.10 an hour starting next year. The Congressional Budget Office released a report stating that this would result in the loss of 500,00 jobs by 2016. This after the CBO announced that Obamacare will shrink the economy by the equivalent of 2.5 million full-time workers. Oh joy, just what the country needs--more people out of work. On the potential up side, the CBO also reported that a gradual increase to $10.10 an hour by July 2016 would lift 900,000 Americans out of poverty.
Raising the minimum wage comes with mixed feelings from business owners. According to this Wall Street Journal article, David Bolotsky, chief executive at Uncommon Goods, a Brooklyn online retailer, believes this will give consumers more money to spend. Erin Calvo-Bacci, owner of Bacci Chocolate Design, a small candy maker in Swampscott, Massachusetts, however, isn't looking to hire people with no experience at such a high cost.
The CBO report says the increased cost of labor would encourage employers to upgrade technology or hire, fewer, higher skilled workers; though that effect would partially be set off by higher earnings among low-wage workers who retained their jobs. Though the report predicts other positive effects for the economy, it also says the increase in the minimum wage could result in price increases and smaller profits, which would diminish some of the effect of increased spending.
The main problem, in my mind, is that politicians are so far removed from struggling to put food on the table that they have no idea what will help the average American or anyone living in poverty. A small town election cost me thousands of dollars during election season to run for a volunteer position. As long as politics remains a rich man's game, no real change will happen in America.